Shafaq News – Baghdad

Iraq’s oil income no longer covers the government’s monthly expenses, the economic observatory ECO Iraq warned on Saturday, forecasting that Brent crude could drop to about $60 per barrel before the end of the year.

In a statement, the observatory explained that current spending amounts to about 11 trillion dinars ($7.77B) a month—out of a total of 27 trillion dinars ($19.06B) in overall government allocations—most of which go to salaries, pensions, and subsidies. Current oil sales at $65–67 per barrel generate less than 10 trillion dinars (about $7.06B), while non-oil revenues remain below 2 trillion dinars (about $1.41B) — a shortfall widening the fiscal gap.

ECO Iraq attributed the expected price decline to higher global output, particularly from the United States, along with abundant supply and easing tensions in the Middle East.

Iraq, OPEC+’s second-largest producer, depends on crude exports for more than 90 percent of its revenue. Economists warn that such heavy reliance could deepen financial instability if prices continue to fall, underscoring the urgency of diversifying national income sources.

Read more: Without oil: Iraq's economic future hanging in the balance

Despite a record budget of around 211–213 trillion dinars ($148.96B–$150.37B) in 2024, Iraq’s fiscal deficit remained largely unchanged, with projections for 2025 indicating a similar shortfall of about 64 trillion dinars ($45.18B). ECO Iraq had earlier reported that by the end of July, the accumulated deficit had already reached 12.15 trillion dinars ($8.58B). 

Read more: Iraq’s budget: political fiscal gaps threaten national stability in 2025